Buyer Beware. What to look out for

The starting point for any conveyancing transaction is caveat emptor – ‘let the buyer beware’. This is the principle that the buyer alone is responsible for checking the quality and suitability of goods/property before a purchase is made.

WHY IS THIS IMPORTANT

When considering purchasing a property, certain decisions must be made about enquiries to be conducted and searches to be carried out. Your conveyancer will be happy to advise you about this, but ultimately the decision is yours and the following should be considered.

HOMEBUYER’S SURVEY

I would strongly advise everyone to have a survey of the property commissioned, as you purchase the property in its present state and condition and you must satisfy yourself as to its satisfactory condition prior to exchange of contracts (when a legally binding contract is formed). It is important to bear in mind that a bank or building society valuation is not a full survey – the surveyor will only comment on the value of the property for lending purposes.

SEARCHES

If you are buying with the aid of a mortgage then lenders will require various searches to be carried out as standard (e.g. Local Authority, Environmental, Plansearch Plus, Drainage and Water and Chancel Repair). However, if you are a cash purchaser, you have the choice of whether to incur the approximate £300 – £350 cost of the searches. I would always encourage prospective purchasers to obtain searches, so that you get a clearer idea of the property.

It is, however, important to realise the limitations of the results of the searches. For example, the Local Authority search will primarily be against only the property you are acquiring. Whilst some matters, such as possible road developments within 200 metres of the property are covered, no planning information that does not specifically relate to the property you are acquiring will be revealed. If you are concerned about possible development in the surrounding area, you should refer to the Plansearch Plus Report which will consider developments within a 100 – 250 metre radius of the property and you can also contact the local planning authority direct.

ADDITIONAL SEARCHES

An Energy and Infrastructure Report is available and, depending on the location of the property you are purchasing, you may also wish to consider commissioning this report. This specifically deals with oil and gas exploration and drilling well locations, wind turbines and wind farms, operational and planned solar farms, renewable energy power plants etc. These developments and projects have the potential to affect nearby property values. They may also result in added visual impact or noise to the neighbourhood.

For many people, the idea of a wind turbine being constructed very close to a property you intend to purchase could be a deal-breaker and certainly something you may wish to make enquiries about.

PROPERTY INFORMATION FORMS

As a standard part of the conveyancing transaction, the seller should provide a completed Fixtures Fittings and Contents Form and Property Information Form (‘PIF’). It is important that these documents are read carefully, and the PIF in particular, should include details of any ‘Notices’ which have been served on the sellers in relation to local proposed planning applications (such as the erection of a wind turbine in close proximity to the property).

However, buyers should beware that the information given in the PIF cannot necessary be relied upon and it is crucial that you also conduct your own enquiries in the area.

THORP AND ABBOTTS

In the recent decision of Thorp and another v Abbotts and another [2015], the High Court dismissed a claim of misrepresentation where it was alleged that the sellers of the property had given fraudulent replies in the PIF.

Briefly, the facts of the case were that in 2010, the Abbotts sold their house to the Thorps for a not insignificant sum of £625,000. After the purchase, the Thorps became aware of proposals for large scale developments in the area. These proposals dated back to before the property was purchased, when it was still owned by the Abbotts, although the proposals were not finalised at that stage. The Abbotts were aware of the planned development, having attended public meetings about this, signed a petition opposing it, discussed the proposals with neighbours and received communications through the post regarding the events.

QUESTIONS POSED

In this case, the questions in the PIF resulting in the alleged misrepresentation were:

3. Notices: 3.1 ‘Has the seller either sent or received any communication or notices which in any way affect the property (for example from or to neighbours, the council or a government department)? If yes, please supply a copy’; and

3.2 ‘Has the seller had any negotiations or discussions with any neighbour or any local or other authority affecting the property in any way? If yes, please give details.’

The seller answered ‘no’ to both questions.

A few months after the purchase was completed, the Thorps commenced legal proceedings against the Abbotts for damages for fraudulent misrepresentation, claiming that if the Abbotts had answered the Property Information Form truthfully, the replies would have revealed proposals for the nearby development and the Thorps would have withdrawn from the purchase.

DECISION

The court ruled in favour of the Abbotts, holding that the sellers’ answers were not misrepresentations. The Judge stated that the words ‘communication’ and ‘affecting’ used in the questions should each be given a ‘relatively confined’ interpretation in favour of the seller. The court considered that these terms should not be construed too widely, so as to force sellers to disclose speculative and remote information. There should be a degree of certainty that an event is likely to happen and would affect the property before an obligation

to disclose arose. The court also considered that the possible influence of the development on value alone was not enough to require disclosure.

LESSONS TO BE LEARNT

Whilst the court’s decision may be surprising, the decision seems to turn on the strict definitions of the words used within the questions in the PIF. (Question 3 in the PIF has since been reworded to try and make it clearer what is expected within the replies).

The main lesson to take from this is that a buyer should not rely solely on information given by the sellers, but make more thorough and general enquiries in the local area. If you are able to, visit the local area, speak to neighbours, the estate agents and anyone else who may have general knowledge of the locality. Others in the area may well be aware that public meetings have been held about proposed developments, or whilst driving through the area, you may spot proposed planning permission application notices tied to lamp posts, or pinned on fences. Ultimately, it is important to gather as much information as possible, so that you can make an informed decision as to whether or not to proceed with the purchase.

ACTION

Purchasing a property can be a daunting experience, especially when you consider the information above. But help is at hand. At Busbys we have an experienced property department and would be happy to help you. We hold the coveted Conveyancing Quality Scheme and Lexcel kite marks awarded by the Law Society. So get in touch with us on 01288 35 9000.

Sam Risdon

Busbys Solicitors

Bude & Holsworthy

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